What are Bitcoins backed by?

Bitcoin has been there for years, which still stands for crypto on the pedestal. Whether you are a beginner or not, you may wonder what magic can hold Bitcoin on the pedestal for such a long time, which will be discussed thoroughly in 2 aspects (the technology and the investors) in this passage. Apart from this underlying basis, we will explore the crypto arena, especially its possible trends and new electronic ones in 2024.

Bitcoins are not backed by any physical commodity or asset, unlike traditional currencies that may be backed by gold or government reserves. Instead, the value and legitimacy of Bitcoin are derived from a combination of factors that contribute to its intrinsic worth in the digital arena:

Underlying technology: blockchain

Blockchain technology is revolutionizing various industries, particularly in the realm of cryptocurrency. Its decentralized ledger system has transformed the way transactions are recorded, verified, and secured, bringing about a paradigm shift in the traditional approach to financial transactions. By operating on a peer-to-peer network blockchain enables participants to collectively validate and record transactions, fostering transparency and trust while resisting tampering.

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One of the key features of blockchain is its decentralized nature, which eliminates the need for intermediaries and central authorities. This not only enhances security by reducing vulnerabilities but also empowers direct transactions between individuals. The bundling of transactions into blocks, securely linked to previous blocks, creates an immutable chain of transaction history, instilling confidence in the accuracy of recorded data.

The applications of blockchain extend far beyond cryptocurrency, with industries such as finance, supply chain management, healthcare, and identity verification exploring its transformative potential. By providing a secure, transparent, and decentralized platform, blockchain redefines processes and systems, unlocking efficiency, security, and trust.

When it comes to the security of cryptocurrencies like Bitcoin, blockchain plays a crucial role in mitigating risks. The transparency maintained by blockchain ensures that all transactions are visible to network participants, making fraudulent activities easily identifiable. Additionally, the immutability of transactions on the blockchain makes it nearly impossible to modify or delete records without detection. The decentralized nature of blockchain, coupled with consensus mechanisms, further reinforces the security of the network, making it resistant to attacks and manipulation.

Bitcoin, the first cryptocurrency, has a rich history dating back to its creation in 2009. Initially met with skepticism, Bitcoin gradually gained recognition and value, reaching significant milestones such as achieving parity with the US dollar and experiencing exponential growth in its value. Over the years, Bitcoin has weathered market fluctuations, regulatory developments, and technological advancements, solidifying its position as the pioneer and leader of the cryptocurrency industry.

The evolution of Bitcoin has been marked by pivotal events, including the first Bitcoin halving and the integration of digital currencies into the traditional financial system. Today, Bitcoin remains the most valuable and well-known cryptocurrency, inspiring the creation of thousands of other cryptocurrencies and laying the foundation for the decentralized finance movement.

Furtherly, if you have a curious mind about how it works in cryptocurrencies, here is an additional explanation for you: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-blockchain-how-it-works.pdf

Bitcoin history: the first cryptocurrency

Bitcoin, the pioneering cryptocurrency, emerged onto the financial scene more than a decade ago in 2009, introduced by the mysterious figure or group known only as Satoshi Nakamoto. By establishing a decentralized peer-to-peer network, Bitcoin broke new ground in the realm of digital currency, eliminating the need for intermediaries like banks and governments.

The Genesis Block, mined on January 3, 2009, marked the inception of the Bitcoin network, heralding a transformative era in finance and technology. Initially, Bitcoin possessed minimal intrinsic value and found its primary user base among early adopters and tech enthusiasts exploring its novel capabilities.

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Despite facing initial skepticism, Bitcoin gradually gained traction and credibility, attracting the attention of investors and businesses as its potential became increasingly evident. A notable milestone in Bitcoin's history occurred in May 2010 when Laszlo Hanyecz made history by purchasing two pizzas for a staggering 10,000 BTC, an event now celebrated annually as Bitcoin Pizza Day within the crypto community.

Over the ensuing years, Bitcoin's value and popularity witnessed exponential growth. In 2011, Bitcoin achieved parity with the US dollar, hitting a price of $1 per BTC for the first time. As awareness expanded and trading platforms proliferated, Bitcoin's value soared. By 2013, it surpassed the $100 mark, culminating in late 2017 when it reached its peak near $20,000.

Bitcoin's journey has been marked by significant events and milestones, such as the first Bitcoin halving in 2012, which halved the block reward from 50 BTC to 25 BTC, impacting the supply dynamics significantly. This event, recurring roughly every four years, influences Bitcoin's scarcity and market dynamics.

The cryptocurrency market encountered its inaugural major price rally and subsequent crash in 2013, initiating a cycle of boom and bust driven by factors like speculative trading, regulatory changes, and technological advancements.

As Bitcoin garnered mainstream attention, governments worldwide began formulating regulatory frameworks to address the legal aspects of cryptocurrencies, resulting in varied responses ranging from acceptance to prohibition. Despite regulatory challenges, Bitcoin continued its evolution and adaptation.

The underlying blockchain technology captivated industries beyond finance due to its immutable and transparent characteristics, leading to the emergence of wide-ranging blockchain applications and projects.

In recent times, Bitcoin has seamlessly integrated into traditional finance, with major institutions and corporations recognizing it as a legitimate asset class and investment vehicle. Moreover, the rise of digital currencies and central bank digital currencies (CBDCs) owes part of its momentum to Bitcoin's success.

Presently, Bitcoin stands as the most valuable and renowned cryptocurrency, boasting a market capitalization in the hundreds of billions of dollars.

Bitcoins today: news in 2024

Bitcoin, the trailblazing digital asset, continues to captivate market participants with its persistent upward trajectory. The cryptocurrency has recently witnessed a surge in value, driven by a convergence of factors that have propelled its price to unprecedented heights. Notably, the entry of prominent institutional investors into the market has bolstered Bitcoin's bullish momentum, bringing it tantalizingly close to breaching the $60,000 mark. This surge has been further catalyzed by the green light given to a new US spot Bitcoin exchange-traded fund (ETF), signaling a growing mainstream acceptance and demand for the pioneering digital currency.

While market sentiment remains overwhelmingly positive, with optimism prevailing among investors, there are indications that a period of profit-taking may be on the horizon as Bitcoin approaches key resistance levels. Technical analysis points to potential hurdles at various price points, including $51,600, $52,500, and $53,085, with corresponding support levels identified at $50,500, $50,000, $48,310, and $47,500. These levels serve as crucial markers for market participants navigating the volatile fluctuations in Bitcoin's price.

Despite the buoyant market activity, cautionary voices urge prudence and emotional restraint in light of the exuberance surrounding Bitcoin. Market dynamics exhibit a noisy pattern, particularly on the upside, as Bitcoin edges closer to its recent peak. A sustainable breakout and a daily close above current levels are deemed crucial to solidify the bullish momentum, underscoring the increasing influence of institutional investments, exemplified by the impact of ETFs on Bitcoin's pricing dynamics.

The ongoing narrative around Bitcoin's market performance prompts reflections on its journey since its inception in 2009. The cryptocurrency's inherent volatility and price swings have made it a subject of intense speculation and discourse. As the cryptocurrency landscape continues to evolve, considerations about Bitcoin's future valuation and the catalysts that could shape its trajectory in 2024 come into sharper focus. Regulatory developments, institutional adoption trends, and technological advancements are identified as pivotal factors that will steer Bitcoin's path in the years ahead.

The debate over Bitcoin's investment merit persists, with proponents touting its potential for substantial returns and portfolio diversification, while skeptics raise concerns about its speculative nature and associated risks. Nonetheless, Bitcoin has succeeded in capturing the attention of investors and enthusiasts globally, solidifying its position as a disruptive force in the financial realm.

Bitcoin's investors: firm support

These investors, ranging from retail traders to institutional behemoths, have demonstrated firm and unwavering support for Bitcoin, underpinning its resilience in the face of market uncertainties and price fluctuations.

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Retail investors, comprising individual traders and small-scale investors, form a significant segment of Bitcoin's support base. Motivated by a combination of factors such as the potential for high returns, technological innovation, and a hedge against traditional financial systems, retail investors have flocked to Bitcoin in droves. Their belief in the decentralization ethos of cryptocurrencies and the promise of financial sovereignty has fueled a groundswell of grassroots support for Bitcoin, contributing to its widespread adoption and mainstream recognition.

Institutional investors, on the other hand, have brought a new level of legitimacy and stability to the Bitcoin market. Hedge funds, asset managers, and corporate treasuries have increasingly allocated capital to Bitcoin as a strategic asset, citing reasons such as portfolio diversification, inflation hedging, and long-term growth potential. The entrance of renowned institutions into the cryptocurrency space has not only provided a vote of confidence in Bitcoin but has also served to attract more institutional interest, further solidifying its position as a viable investment option.

Moreover, the support for Bitcoin extends beyond financial considerations, encompassing philosophical beliefs and ideological principles. Advocates of Bitcoin often view it as a tool for challenging traditional financial systems, promoting financial inclusion, and advocating individual sovereignty over personal wealth. This ideological alignment has fostered a sense of community among Bitcoin investors, reinforcing their commitment to the cryptocurrency irrespective of short-term market fluctuations.

The resilience and steadfast support exhibited by Bitcoin investors have been tested through various market cycles, regulatory challenges, and external pressures. Despite facing criticism, skepticism, and occasional bouts of volatility, Bitcoin's investor base has remained resolute in its conviction about the long-term potential of the digital asset.

Why they invest in Bitcoin: the price of Bitcoin in recent years

In 2009, Bitcoin made its debut with a nominal value of $0.00099, heralding the introduction of a revolutionary digital currency. Over the subsequent years, Bitcoin experienced exponential growth, with 2010 marking the first real-world transaction using the cryptocurrency and the infamous “Bitcoin Pizza Day,” during which 10,000 Bitcoins were used to purchase two pizzas. This period laid the groundwork for Bitcoin's utility as a medium of exchange and underscored its potential for real-world applications.

The year 2011 witnessed a watershed moment as Bitcoin reached parity with the U.S. dollar, signaling its growing recognition and acceptance as a legitimate form of currency. This milestone captured the attention of early adopters and enthusiasts, propelling Bitcoin into the spotlight and setting the stage for its ascent in the years to come.

Subsequent years saw Bitcoin grappling with regulatory restrictions, security breaches, and technological developments that profoundly impacted its price trajectory. The seizure of the Silk Road marketplace and China's regulatory clampdown in 2013 prompted significant price fluctuations, underscoring the influence of regulatory actions on the cryptocurrency market.

The years 2017 and 2018 marked a period of unprecedented volatility and regulatory scrutiny, with Bitcoin experiencing an extraordinary surge in price, followed by a sharp correction and closure of Chinese mining operations. Despite these challenges, institutional adoption gained traction in 2019 with the launch of Bakkt futures contracts, signaling a growing interest from traditional financial institutions.

The outbreak of the COVID-19 pandemic in 2020 coincided with Bitcoin's third halving event, fueling a surge in price amid heightened market uncertainty. This period highlighted Bitcoin's appeal as a potential hedge against economic turmoil and inflationary pressures, prompting increased investor interest.

The historic bull run in 2021 propelled Bitcoin to new price highs, accompanied by intensified regulatory scrutiny and environmental concerns related to its energy-intensive mining process. These developments spurred conversations about the sustainability of Bitcoin mining and its environmental impact, underscoring the need for industry-wide reforms.

In 2022 and 2023, efforts to address sustainability concerns gained prominence, reflecting a growing emphasis on environmentally friendly mining practices and the integration of renewable energy sources. These initiatives signaled a maturing industry cognizant of its environmental footprint and committed to fostering sustainable practices.

Throughout this timeline, investors have been drawn to Bitcoin for a multitude of reasons. Its potential for high returns, diversification benefits, utility as a hedge against fiat currency devaluation, and the allure of a decentralized financial system have all contributed to sustained investor interest. Additionally, Bitcoin's emergence as a disruptive force in the financial landscape and its promise of technological innovation have resonated with a broad spectrum of investors, from retail traders to institutional players.

What do they do with Bitcoins？

Bitcoin offers a wide range of use cases and functionalities that meet the needs of wide-ranging user needs and preferences. Individuals and institutions engage with Bitcoin in various ways, leveraging its unique properties as a decentralized digital currency and store of value.

Payments: Bitcoin can be used as a medium of exchange for purchasing goods and services from merchants that accept cryptocurrencies. Many online and offline retailers now support Bitcoin payments, allowing users to transact in a secure and borderless manner.

Investment: Bitcoin serves as a popular investment asset, with individuals and institutions buying and holding Bitcoins as a store of value or a potential hedge against inflation and economic uncertainty. Investors often view Bitcoin as a digital gold that can diversify their investment portfolios and provide long-term growth potential.

Remittances and Cross-Border Transactions: Bitcoin enables fast and low-cost cross-border transactions, making it an attractive option for remittances and international money transfers. Users can send Bitcoins to recipients anywhere in the world without relying on traditional banking systems, thereby reducing transaction fees and processing times.

Trading and Speculation: Bitcoin trading has become a lucrative activity for many traders and investors, who capitalize on the price volatility of the cryptocurrency to generate profits. Cryptocurrency exchanges facilitate the buying and selling of Bitcoins through trading pairs with other digital assets or fiat currencies.

Fundraising and Crowdfunding: Bitcoin has been used as a means of fundraising through initial coin offerings (ICOs) and token sales, allowing projects and startups to raise capital by issuing digital tokens. This crowdfunding model has democratized investment opportunities and incentivized innovation in various industries.

Smart Contracts and DeFi: Bitcoin's underlying technology, blockchain, has paved the way for the development of decentralized applications (dApps) and smart contracts. While Bitcoin's primary focus is on peer-to-peer transactions, platforms like the Lightning Network enable additional functionalities such as instant micropayments and smart contract capabilities.

Privacy and Security: Bitcoin offers a level of privacy and security that traditional financial systems may not provide. Users can control their funds without the need for intermediaries, ensuring greater autonomy over their financial assets. Additionally, features like multi-signature wallets and hardware wallets enhance the security of Bitcoin holdings.

Charitable Donations: Bitcoin donations have gained popularity among charitable organizations and nonprofits, allowing donors to contribute to social causes and humanitarian efforts using cryptocurrency. Bitcoin's transparency and traceability make it easier to track donations and ensure accountability in charitable giving.

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Other cryptos: electronic crypto

Electronic cryptocurrencies, also known as digital currencies or altcoins, encompass a broad spectrum of blockchain-based assets beyond Bitcoin. These alternative cryptocurrencies have emerged to address various aspects of decentralization, privacy, scalability, and functionality that may differ from Bitcoin's core features. If you are interested in it and want a try, here are some of the representatives for you:

When will crypto go back up: for investors in 2024

avigating the volatile cryptocurrency market is akin to riding a rollercoaster, filled with excitement and uncertainty. The year 2021 bore witness to staggering value surges, exemplified by Solana (SOL) and Shiba Inu (SHIB) skyrocketing by over 10,000% and 40,000,000%, respectively. However, these meteoric rises are often succeeded by sharp declines, leaving the future of cryptocurrencies shrouded in ambiguity. Despite this tumultuous landscape, the latter part of 2023 ushered in a resurgence of major coins, instilling a sense of cautious optimism among crypto investors as they peer into 2024.

Foretelling which cryptocurrency will seize the spotlight next poses a formidable challenge. Yet, amidst the flux, certain contenders are strategically leveraging prevailing trends such as artificial intelligence (AI), decentralized applications (dApps), and digital payment solutions. Furthermore, established cryptocurrencies stand poised for substantial growth in the forthcoming year.

SingularityNET (AGIX) emerges as a blockchain platform fostering the creation, sharing, and monetization of AI services. Empowered by the AGIX utility token, SingularityNET stands at the forefront to capitalize on the escalating AI wave. Similarly, Ethereum (ETH) retains significant growth potential owing to its pioneering provision of smart contracts for dApps.

Fetch.ai (FET), an AI laboratory facilitating the development of autonomous agents for real-world tasks, and Bitcoin (BTC), the premier cryptocurrency, have captured attention to their growth prospects. Meanwhile, Monero (XMR) distinguishes itself as the preeminent privacy coin, offering clandestine and untraceable transactions— a coveted attribute amidst mounting crypto regulations across various nations.

Aave (AAVE), a decentralized finance (DeFi) protocol and lending platform, has broadened its scope to encompass real-world assets, augmenting its long-term outlook. Similarly, Uniswap Protocol Token (UNI), the native token for Uniswap, a leading automated market maker (AMM), furnishes decentralized crypto trading sans the necessity for conventional registration or personal information.

The trajectory of Bitcoin engenders immense interest. While retaining its preeminent status, recent positive developments, such as the green light for Bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC), have kindled optimism among investors. The ongoing recovery and potential surge in institutional investments further fortify Bitcoin's prospects for 2024.

FAQ:

What is Satoshi Bitcoin？

A Satoshi is the smallest unit of Bitcoin, named after its pseudonymous creator, Satoshi Nakamoto. One Bitcoin is divisible into 100 million Satoshis, making it possible to make microtransactions and conduct precise transactions with Bitcoin. This division allows for flexibility in using Bitcoin, as users can transact in smaller denominations than a whole Bitcoin. As of now, with one Bitcoin being worth a substantial amount in traditional currency, the use of Satoshi allows for practical and everyday transactions with fractions of a Bitcoin. For example, if one Bitcoin is worth $50,000, then one Satoshi would be worth $0.0005.

What are the common scams in crypto trading？

Pozi Scheme: A type of investment scam where returns are paid to earlier investors using the capital contributed by new investors, rather than from profits earned by the investment. The scheme relies on attracting new investors to generate returns for earlier investors and keep the scheme going.

Fake ICOs (Initial Coin Offerings): fraudulent fundraising campaigns that claim to offer a new cryptocurrency or token to investors. These schemes aim to exploit the popularity and potential profitability of ICOs by tricking unsuspecting investors into contributing funds to a non-existent or worthless project.

There are many scams beyond these two, here we prepared a video for you in which you can learn other types of crypto and how to avoid them: https://www.youtube.com/watch？v=6Y_7Qq3Rehs

How to start a crypto investment from the very beginning？

To start investing in cryptocurrency, beginners should first educate themselves on blockchain, wallets, exchanges, and different cryptocurrencies using online resources. Choose a reputable exchange with robust security features, create an account, and complete verification. Start with a small investment, diversify across cryptocurrencies, and ensure a secure wallet for storage. Stay informed about market trends and developments, as the market is highly volatile. Join online cryptocurrency communities to connect with experienced traders and seek advice. By taking these steps and staying informed, beginners can confidently navigate the world of cryptocurrency trading.

What is Bitcoin mining？

Bitcoin mining is the process through which new Bitcoins are created and transactions are validated on the Bitcoin network. Miners use powerful computers to solve complex mathematical puzzles, which, when solved, validate transactions on the network and add them to the public ledger known as the blockchain. In return for their mining efforts, miners are rewarded with newly minted Bitcoins and transaction fees.

What is a Bitcoin wallet？

A Bitcoin wallet is a digital tool that allows users to store, send, and receive Bitcoins. It consists of two components: a public address (similar to an email address) that others can use to send Bitcoins to you, and a private key (like a password) that gives you access to your Bitcoins. There are different types of Bitcoin wallets, including hardware wallets, software wallets, and online wallets.

What does it serve？

A Bitcoin wallet serves as a secure means to manage your Bitcoin holdings and conduct transactions on the Bitcoin network. It allows you to store your Bitcoins safely, send funds to others, receive payments, and view your transaction history. Additionally, a Bitcoin wallet provides control over your digital assets and ensures that only you have access to your funds through the private key. It is crucial for anyone looking to engage in Bitcoin transactions to have a reliable and secure Bitcoin wallet.

Long has been held as something on the pedestal, despite investors looking forward to revitalizing the spectacle of Bitcoin, there are many outsiders, or even, insiders who are expecting a change in the crypto realm. After all, 2024 marks a beginning for all.